Computer software is a unique product that requires specialized protection. The production of valuable software these days is most likely the result of years of research and development by a number of highly skilled individuals. To maintain such research requires a large investment. Computer software is a unique product in that production and distribution costs are de minimus in comparison to the initial costs of research and development. Moreover, unlike most other products, software can be easily and inexpensively reproduced without a loss in quality between an original and a copy. Accordingly, software must be protected differently then other business and commercial products such as through copyright and patent protection. After protecting their software using the appropriate intellectual property law mechanisms, software companies can then require users to purchase licenses to use software rather than selling all rights to consumers outright.
Software product licenses are agreements between software companies (licensor) and end users (licensees) granting users the right to use, run, or access software in accordance with the terms of a license agreement sometimes referred to as end-user licensing agreement (EULA). Licensing agreements or EULAs can be structured in almost any manner desired by software producers. For example, licenses can be perpetual or time-based. Furthermore, license agreements can be structured in a variety of different manners depending on the type of software product (e.g., application, system software, server software) to be licensed.
Software piracy refers to the unauthorized use of software. Piracy costs software companies billions of dollars worldwide and reduces the amount of money available for research and development. As a result, software innovation is stifled and thousands of skilled people are left without jobs. Software companies are not the only entities that are negatively impacted by software piracy. Users of pirated software risk carrying and transmitting viruses as product patches and upgrades are not freely available to pirated software versions. Use of pirated software also drastically increases IT support costs in organizations due not only to viruses but also because of version control problems that prevents efficient sharing among users. Software can be “pirated” by making unauthorized copies of a program, under reporting the number of computers using software, or otherwise failing to abide by a licensing agreement. For example, a user may purchase a single copy of software and install it on more than one computer or allow others (e.g. friends, family, coworkers) to install the program in violation of a licensing agreement. Alternatively, a user may simply copy a software program (e.g., burning a duplicate CD) or download the software program without paying the respective software company for a license.
Conventionally, licensing systems employ one of several largely unsuccessful techniques to prevent piracy and capture the appropriated revenue under license agreements. Some software companies distribute software via disks (e.g., compact disk or floppy disk) with a licensing key or product ID that needs to be entered during installation to activate the software and thereby complete installation of the software. This system simply ensures that users have both the software disks and the product ID and therefore provides very little protection against piracy. Additionally, some software companies have attempted to copy protect their software so that a purchaser cannot make copies and give them to others such as co-workers, friends, and family. However, this does not protect against simply loaning those people the original software with the product ID. Moreover, efforts to copy protect software have been for the most part unsuccessful as most copy protection efforts have been easily circumvented by knowledgeable programmers. Furthermore, volume licensing is conventionally accomplished by purchasing an appropriate license for the number of users that will be utilizing the software. If later more users are added, the licensor software company relies on the honesty of the purchasing licensee to contact the software company and purchase extra licenses for the additional users in excess of what is provided for by the current licenses. Therefore, there is currently no viable enforcement system that ensures that licensees abide by their license agreements. Accordingly, there is a need in the art for a novel license enforcement system which is secure and easy to use.